Outplacement is a service that helps professionals find a new job after being laid off. It includes preparing résumés and cover letters, coaching on interview techniques, and access to professional networks. Outplacement is typically charged as a percentage of the professional’s earnings or an hourly rate up to 15 hours per week for three months.
The outplacement pricing
- The total cost of the outplacement program will be computed according to a fixed schedule.
This schedule is distributed to the employees at the start of each month, and also collected as part of their severance pay. The outplacement program is not a monthly charge but takes place on an annual basis.
- Fixed Monthly Cost:
In this case, outplacement is charged throughout the year in equal installments, no matter when you need it. Most companies recognize that there isn’t a one-size-fits-all solution for every job loss scenario and that offering support over a longer period of time makes more sense for most candidates (especially ones who have been out of work for several months).
- Fixed Hourly Rate:
In this case, outplacement is charged an hourly rate that is based on the candidate’s annual gross income. For some candidates, this may be something you can live with because the outplacement program isn’t something they need every year. Other candidates may have a hard time living with any type of fixed number since they will have to justify their payment needs over time by comparing it to their previous year’s experience-based earnings.
- Hourly Rate:
With this model, the rate is based on the candidate’s annual gross income. The outplacement specialist will figure out what percentage of this amount to charge clients, so that the average length of a job search is 3 to 6 months. This may seem like a high rate for some candidates, but it isn’t really; if you have an average gross income of $50,000 per year, it doesn’t take much more than 4 weeks to figure out what that works into an hourly rate.
Benefits of outplacement
- Reduce Severance Package:
In the USA, staff are not allowed to leave their jobs with a severance package. If they quit, they will have to return their money. The company can reduce the severance package if the employee is going through outplacement.
- Control Turnover Costs:
If you pay your former employees higher than average market rates and provide them with outplacement, it can be viewed as a benefit to the company since turnover costs are reduced by up to 50%. Outplacement should be viewed as providing value for money, which will reduce costs in other areas of business such as recruitment and training costs.
- Prevent Turnover:
An outplacement program helps to avoid the costs associated with staff leaving of their own accord. It is a good preventive measure, which is often overlooked in the business world. The cost of recruiting new staff is many times greater than the outplacement costs. Outplacement can be a significant tool for companies who need to retain staff.
- Reduce Attrition:
Attrition levels are reduced when employees are offered outplacement program.It is thought that employees are more likely to stay with the company if they feel they have been treated well during the redundancy process and offered help if needed. This can help reduce critical skills shortages as well as loss of intellectual capital.